RICHMOND (AP) — Two banks are suing the working class San Francisco Bay Area city of Richmond over its plan to invoke eminent domain to condemn and seize hundreds of underwater mortgages.
Richmond city officials say the idea is to help struggling homeowners refinance into new mortgages in line with their homes’ current value. The move would be the first of its kind in the country.
The Contra Costa Times reports that Wells Fargo and Deutsche Bank filed a lawsuit this week, alleging the city’s program could cost investors $200 million or more.
The lawsuit seeks a preliminary injunction against Richmond and Mortgage Resolution Partners, an investment firm the city has partnered with on the plan.
Mortgage Resolution Partners Chairman Steven Gluckstern said the lawsuit is without merit.